david rigby Posted March 23, 2001 Posted March 23, 2001 A few days ago I heard a news commentary stating that the Treasury is not currently selling short-term notes, and may cease (or temporarily cease) selling 30-year bonds. Any comments on this, especially with respect to the various indexes we use that derive from treasury yields? I'm a retirement actuary. Nothing about my comments is intended or should be construed as investment, tax, legal or accounting advice. Occasionally, but not all the time, it might be reasonable to interpret my comments as actuarial or consulting advice.
mwyatt Posted March 26, 2001 Posted March 26, 2001 Two points: 1) My brother-in-law was a former trader in the 30-Year pit at the Chicago Board of Trade. The US Treasury a while ago stopped sales of 30-year bonds; his gut feeling is that the discontinuance probably caused a 50 basis point drop in yields (due to scarcity - the only stuff selling now are resells). 2) This question was brought up in the Dialogue with the IRS session at the 2001 EA meeting. Their response (Holland and Wickersham) was that the IRS does not make law, only interprets it; need to look to Congress if want to switch to a different basis. My comment: I think that there is recognition of the problem by all parties involved. Unfortunately, I think it will take time to fix as it will have to be done by legislation, and in the real world this is most likely not perceived as a burning issue.
Guest Posted March 27, 2001 Posted March 27, 2001 You may want to look at the Feb. 27th BNA - Pension & Benefits. There is a story on exactly this point. According to the article, a task force has been formed to help find a solution.
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